Back on Track

The first week of 2013 is in the books and it was a good one. A huge move on the fiscal-cliff deal put pressure on investors to keep pace and that created very strong underlying support. As is often the case when there's strong upward momentum, buyers are extremely anxious to buy dips, and the pullbacks don't last for long.

There was slight nervousness Thursday afternoon following the release of the Fed minutes with the hint that it may actually turn off the printing press at some point, but a decent jobs report this morning, along with anxiety about underperforming, soon had the market back on track.

Under the surface, there has been good breadth all week, which is a function of speculative action in small-caps. The Nasdaq has lagged mostly due to Apple (AAPL), which bucked the trend with very poor action.

I mentioned this morning that I don't intend to be bearish until I see real weakness. The close this afternoon is a good example of why I'm taking that approach. It is too easy to find yourself sitting under water as you try to build a short position into an uptrending market. Yes, it might be a bit extended, but anyone who has traded the last few years should be very aware that markets extended on declining volume often become even more extended.

Earnings season is quickly approaching and that will be the focus soon. Generally, that means we can concentrate more on individual stock picking, but we have another week before the big reports start to hit.

Have a great weekend. I'll be working on my watch lists, and I'll see you on Monday.

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